Car Leasing Company Start Up confusion ?!?!

[Jay I]

Hi there

As you can probably tell, I am new to this forum and this is my first post, however I have been on this forum many times as a guest and do find it very informative.

Next year Autumn, I am planning to start a company that leases out standard second hand cars that I have purchased myself (not finance) and then I want to lease it out short term (3-6 months) to business users (I would mostly aim for uber/cab drivers as my target audience, so I would be purchasing cars like the vauxhall insignia, toyota prius + etc). I plan to buy 4/5 at the start.

At the start of the company, I do not want to offer insurance as part of the leasing contract as in order to do that I would need some sort of insurance on the fleet and I do not want to enter any long term insurance contracts in case the worst case scenario happens and the business never takes off. I know there could be such things as short term fleet insurance, but considering I’m still quite young (23) and have no experience in this industry, I wouldn’t even want to know what the prices would be.

I wanted to know if this is a viable possibility -

Having a fleet of cars that aren’t insured at all (except for maybe motor insurance to ensure that it is covered when being stored), then leasing it out to business users individually (I will make sure that customers are thoroughly vetted) and making sure that they have insurance to cover the cost of the car should any damages happen.

Are there any services out there available to the public to make sure that a particular vehicle is being insured properly?

Is there any possible run ins with the law under such situations?

What are the things that I should be aware of when leasing out these cars without insurance being part of the deal?

As I said before, I am not experienced in this field so forgive me if my questions are naive.

If there is anybody viewing this that has experience in this industry (I have seen a few in my time of being on this forum), any pointers, tips or advice would be extremely helpful.



Thanks Guys

 

[STDFR33]

People rent cars on short term hire for convenience.

The it f they had to secure through another party, you'll probably find that you lose business to companies such as Enterprise that offer insurance as part of the package.

 

[Jay I]

People rent cars on short term hire for convenience.

The it f they had to secure through another party, you'll probably find that you lose business to companies such as Enterprise that offer insurance as part of the package.

But if i am able to offer a price competitive enough (for example if the price of my car lease per month + the price of their insurance is roughly the same as the massive companies renting cars) and I was to have a much more hands on service - then you don't think it could stand a chance?

 

[STDFR33]

But if i am able to offer a price competitive enough (for example if the price of my car lease per month + the price of their insurance is roughly the same as the massive companies renting cars) and I was to have a much more hands on service - then you don't think it could stand a chance?

I don't think so, personally.

I would not go to the trouble of using two companies when I could use one established company.

 

[TotalWebSolutions]

I agree that having the convenience of a package with insurance included would be more attractive (and perhaps expected). Similarly, if you were to lease out flats for short-term lets for business use you would expect utilities to be included.

 

[Mark T Jones]

(for example if the price of my car lease per month + the price of their insurance is roughly the same as the massive companies renting cars) and I was to have a much more hands on service - then you don't think it could stand a chance?

You aren't offering any compensation for their time and effort.

The service thing is very esoteric - everyone likes to 'sell' good service - how are you going to quantify it?

If you have a truly compelling USP, then you could get away with it. On the other hand, this is a competitive sector. I had a customer who ran a 200-strong fleet of short-term replacement vehicles to the taxi trade/. He constantly complained about how price sensitive it was - ultimately sold out for not a huge sum to do something more lucrative

 

[Chris Ashdown]

The customer shows you their full insurance certificate then next day cancels it and goes with basic road cover, Car involved in smash, your customer cannot pay for repairs

Do Uber drivers have to have fixed radio or other equipment that might make holes in dash etc

High milage so high maintenance

 

[Scalloway]

A couple of friends of mine were discussing an elderly gentleman they used to know. He was too old for self drive insurance so the hire company he used regularly made up an agreement that basically meant he bought the car from them if it was seriously damaged.

 

[Jay I]

I don't think so, personally.

I would not go to the trouble of using two companies when I could use one established company.

So you are saying that if I had an 2010 vauxhall insignia 60,000 milage on a leasing offer (no insurance included) for three months going for £80 per week with no deposit required, free vehicle pick up and drop offs to any destination in london, 24/7 support, unlimited milage allowance, free tom toms included - that I wouldn't be able to get at least a few customers at the start??

I agree that having the convenience of a package with insurance included would be more attractive (and perhaps expected). Similarly, if you were to lease out flats for short-term lets for business use you would expect utilities to be included.

What do you mean specifically when you say utilities?

And just to clarify, I intend to include insurance once I have more experience in the field (If I do get to this stage), I just dont want to commit to the contracts at the beginning stage incase I have no demanders, then I could just resell the cars and leave the industry. This way, once I have more experience I should be able to get much better insurance offers.

You aren't offering any compensation for their time and effort.

The service thing is very esoteric - everyone likes to 'sell' good service - how are you going to quantify it?

If you have a truly compelling USP, then you could get away with it. On the other hand, this is a competitive sector. I had a customer who ran a 200-strong fleet of short-term replacement vehicles to the taxi trade/. He constantly complained about how price sensitive it was - ultimately sold out for not a huge sum to do something more lucrative

I understand your point here, thanks for your input

The customer shows you their full insurance certificate then next day cancels it and goes with basic road cover, Car involved in smash, your customer cannot pay for repairs

Do Uber drivers have to have fixed radio or other equipment that might make holes in dash etc

High milage so high maintenance

Is there not a way you could constantly check the type of insurance on the car leased out to make sure your covered so that the minute it is changed/removed you can take action against this.

Also, isit not possible to have some sort of written agreement with the customer that if the car is fully damaged, then he has to pay X amount ect.

It still early in my research into this industry, so for all I know I could be talking nonsense, I guess I should call insurance lawyers (or maybe another type of lawyer) to find out what can be done in such cases.

Thank you for your input though, greatly appreciated

A couple of friends of mine were discussing an elderly gentleman they used to know. He was too old for self drive insurance so the hire company he used regularly made up an agreement that basically meant he bought the car from them if it was seriously damaged.

This makes sense, thanks for you input dude

 

[STDFR33]

Have you done any research?

Because 5 minutes of research has just told me that £80pw is too expensive.

I can rent an Insignia or similar sized car, inclusive of insurance for 1 week and that would cost me £165 with Enterprise.

If I had to self insure, I have obtained 3 insurance quotes that ranged from £100 to £120 for the week. Added to your £80 rental, that makes you the less convenient, and more expensive option.

It's called economies of scale. If I self insure, it will cost more than a rental company insuring 000's of vehicles. They can therefore offer a cheaper all-inclusive package.

If you were to offer your rentals any cheaper than £80pw, you wouldn't be making any money.

 

[Jay I]

I just done the same research and found out that the same car is £200 per week
Please check the following screens

gyazo . com / 2d509d0d3306c6893dff8de7ac304e77
gyazo . com / d796209a9f91bf29f250a6574f74151c

What area did you search dude? I am only focusing on the London area by the way

Another thing to add that might share some insight in my plan, I am not too fussed about making large profits in the first couple of years (to an extent); so I feel I could offer a really competitive price and service - but eventually after gaining a somewhat solid reputation (to the point where I can get good deals with insurance companies) then I could offer more convienient deals and enter more lucrative oppurtunities (hiring out luxury cars for events for example).

Have you done any research?

Because 5 minutes of research has just told me that £80pw is too expensive.

I can rent an Insignia or similar sized car, inclusive of insurance for 1 week and that would cost me £165 with Enterprise.

If I had to self insure, I have obtained 3 insurance quotes that ranged from £100 to £120 for the week. Added to your £80 rental, that makes you the less convenient, and more expensive option.

It's called economies of scale. If I self insure, it will cost more than a rental company insuring 000's of vehicles. They can therefore offer a cheaper all-inclusive package.

If you were to offer your rentals any cheaper than £80pw, you wouldn't be making any money.

 

[STDFR33]

I searched for West Yorkshire. London explains the price difference.


Though looking at it from the angle of a business in this industry, the costs of operating out of London are higher.


Despite what you say, you do need to make profits early on. The cars you are renting will soon become obsolete and expensive to maintain. You therefore need to be making sufficient profits to reinvest in newer cars and at the same time, try to grow your fleet.
The alternative would be to have substantial cash reserves.

 

[Jay I]

I searched for West Yorkshire. London explains the price difference.


Though looking at it from the angle of a business in this industry, the costs of operating out of London are higher.


Despite what you say, you do need to make profits early on. The cars you are renting will soon become obsolete and expensive to maintain. You therefore need to be making sufficient profits to reinvest in newer cars and at the same time, try to grow your fleet.
The alternative would be to have substantial cash reserves.

Yeah I understand you, I want to make profits but I know making Large profits may not be possible in the first few years (even though you never know)

And with the car becoming expensive to maintain, I plan to overcome this by selling the cars on as soon as The short term contract is over (hoping to avoid depreciation and sell it for the price I bought it for, I figured a car leased for three months shouldnt bring no more than 6k milage and from the research I have done, I feel selling it for the same price would be possible).

I have a good amount of cash reserves to be honest and could well invest in 10/15 cars now but do not want to rush anything.

 

[STDFR33]

6000 miles for a taxi driver for 3 months seems on the low side. I've just found this comment on another forum:
As an airport private hire driver based at Heathrow, I average just over 200 miles a day, so about 60,000 miles a year.

 

[Jay I]

6000 miles for a taxi driver for 3 months seems on the low side. I've just found this comment on another forum:
As an airport private hire driver based at Heathrow, I average just over 200 miles a day, so about 60,000 miles a year.

Yes I saw this just now also when researching average cab mileage per year, airport drivers do about double what an average cab driver does by the way.

So with this being said, I would say that 10k over three months is a more like outcome (on average). So do you think that a second hand vauxhall insignia/toyota prius + etc. that has an extra 10k on the clock (lets say it was initally 30k mileage) will depreciate much in value??

And even it depreciates, would it be a massive depreciation do you think?

I will state this again, I have done minimal research into this and plan to look into this properly as soon as i start uni again (next week) so forgive me if I do sound naive. But I do think this forum is a good starting point

 

[STDFR33]

It wouldn't lose value as quickly on an older car than it would on a car that is only a year or two old.

 

[Jay I]

It wouldn't lose value as quickly on an older car than it would on a car that is only a year or two old.

Noted.
Thank u so much for ur input

 

[Mark T Jones]

The answer to most of your questions will lie in detailed research. You can find depreciation per mile (though what you actually achieve will rely on your skills and contacts when buying and selling)

Your most unreliable variable will be vehicle reliability nif a dual mass flywheel goes, for example, that's £1000 straight away

Clearly you need to test and quantify assumptions, marketing costs, average utilisation, storage when vehicle is off hire legal costs to get contracts tight etc

Hopefully from this detailed research you will also establishm if you can make money at £80